Kraken: the correlation between Bitcoin and traditional markets continues to weaken

According to some analysts, a „breathtaking bull run“ of Bitcoin may be imminent

Kraken, a well-known U.S. exchange, has published a report in which it reports that the correlation between Bitcoin (BTC), the U.S. dollar and traditional markets is continuing to weaken.

Kraken’s September volatility report found that Bitcoin has basically maintained a negative correlation with the US Dollar Index (DXY) since May, despite a short approach between the two markets in early September.
30-day correlation between Bitcoin and the US Dollar Index

The paper argues that BTC’s divergence from the dollar is a consequence of the US Federal Reserve’s decision to keep interest rates at zero until at least 2023, in addition to the decline in growth rates.

Meanwhile, Bitcoin has been showing a positive correlation with the euro since May.

The paper also notes that although at the beginning of the month the correlation between BTC and S&P500 was at its lowest level in the last 8 months, this will tend to increase as both markets have experienced a phase of lateral consolidation.

BTC’s relationship with gold has remained positive since mid-July, and both assets have been under downward pressure in recent weeks.
30-day correlation of Bitcoin with gold

Looking to the future, Kraken predicts that Bitcoin will perform better in October than in September, which would be consistent with the trend shown in eight of the last nine years.

The exchange predicts that BTC will grow 11% in October compared to September, suggesting that the cryptocurrency could close the month at $11,850. However, Kraken notes that Bitcoin has performed below average during six of the nine months of 2020.

However, Kraken’s cautious optimism is overshadowed by the markedly bullish forecasts of two esteemed analysts.

Former hedge fund manager Raoul Pal recently stated that he has moved more than half of his personal investment portfolio to Bitcoin in anticipation of a massive institutional adoption of the asset:

„From what I know, all the institutions, all the people I talk to, are about to invest heavily in this area.

Alex Saunders of Nugget’s News, on the other hand, compared the current situation to that of mid-2017, clarifying how a boom in mainstream interest in Bitcoin could trigger a „breathtaking rise:

„July 2017: $BTC is worth $2,700 and investors are afraid of SegWit, hard forks and FUD. At the time I shared an article of mine about a breathtaking rise, which I predicted and that would have amazed everyone.

Last night I wrote another equally bullish editorial. I think another bull run is near.

In an update note sent last night to his followers, Saunders said:

„Listed companies [and] major investors are talking about this new asset class, at a time when there is a record amount of money held in bank accounts, waiting to be employed“.